Conditional Cash Transfers: Do They Change Time Preferences and Educational Aspirations?

34 Pages Posted: 20 Oct 2016

See all articles by Diana Contreras Suarez

Diana Contreras Suarez

Monash University

Lisa A. Cameron

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; IZA Institute of Labor Economics; J-PAL

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2016

Abstract

Conditional Cash Transfer programs are designed to increase human capital in poorer families. They do this directly through incentives and conditions. A further way in which these programs may influence household decisions is through impacts on preferences. Preferences may change as a result of habits formed during program participation, the information received as part of the program and/or by the relaxation of the budget constraint which gives households a greater ability to look beyond daily needs and plan for the future. Using a regression discontinuity design we test whether a large conditional cash transfer program in Colombia affects the time preferences of participating households and their aspirations for their children's education. We find that it does not. There is no significant difference between current and past participating households' preferences and educational aspirations and those of otherwise similar non-participating households. Thus, the positive educational impacts identified in previous studies appear to be driven by the ongoing receipt of the cash transfers and the associated conditions. Hence if the transfers were to stop, program benefits would be limited to those associated with the educational and health improvements that were obtained during the program's implementation. The health and education of subsequent children would likely revert to pre-program levels.

Keywords: conditional cash transfers, time preferences, educational aspirations, regression discontinuity design, Colombia

JEL Classification: O15, I25, I38, D91

Suggested Citation

Contreras Suarez, Diana and Cameron, Lisa A., Conditional Cash Transfers: Do They Change Time Preferences and Educational Aspirations? (October 6, 2016). Available at SSRN: https://ssrn.com/abstract=2854883 or http://dx.doi.org/10.2139/ssrn.2854883

Diana Contreras Suarez (Contact Author)

Monash University ( email )

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Clayton, Victoria 3168
Australia

Lisa A. Cameron

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

IZA Institute of Labor Economics ( email )

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HOME PAGE: http://www.povertyactionlab.org/cameron

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